Bulgarian National Bank Reserve Moved to Foreign Vaults

The Bulgarian National Bank reserve fell sharply in January 2009. Photo by seecorridors.com

The reserve of the Bulgarian National Bank (BNB) fell by EUR 734.7 M in January.

Bulgarian commerce banks have put this money in foreign banks in pursuit of higher profits, the BNB announced Saturday.

In January, the BNB decreased the mandatory reserve that each commerce bank should have as a guaranteed deposit in its vault from ten to eight percent and then released two percent amount to about EUR 1 B.

The Bulgarian banks have allocated about one fourth of this sum in the form of different loans and the rest of the money has been placed in foreign banks as security deposits, analysts say, cited by Standart daily newspaper.

According to the analysts, this is a very good way to manage the liquidity in the banking system. As the global financial slowdown has hit hard on Bulgaria's real-term economy, the demand for bank loans has decreased and this is why the crediting business could appropriate only one-fourth of the released money.

The state securities market and the stock exchange trade in Bulgaria has also shrunk considerably and this makes the banks seek other investment opportunities, which include making deposits abroad.

 

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